Writing & Anchoring are Powerful in Negotiations

By Marty Latz, Latz Negotiation Institute

The lady started at 285 RMB – about $50 – for the small doorknocker with the dragon face on it meant to ward off evil spirits. She was one of many vendors in stalls on the side of the road next to the chairlift that took tourists up to the Great Wall of China.

I expressed some interest, but just a little. So I did not initially counter. A little while later, after she had moved down several times, each time writing down her move on a little piece of paper and showing it to me, I offered her 50 RMB (about $8).

She then kept moving down – and I stuck at 50 – until we were 10 RMB apart. But then she stopped. So I left and took the chairlift up to the Great Wall.

Two hours later I returned and bought a slightly larger dragon-faced doorknocker for 60 RMB.

We can learn a few things from this.

1. Almost nothing beats leverage

My willingness to walk away and go with my alternative or Plan B – not buying anything – was more powerful than almost anything. Going to hike a portion of the Great Wall, and the message it sent to the vendor, was crucial.

It was also no coincidence that others stalls nearby had similar doorknockers and were not busy. The vendor’s Plan B – selling the doorknocker to someone else – did not appear good.

Powerful leverage – having a strong Plan B and your counterpart not having a strong Plan B – was the most critical element here. And it frequently is.

2. The power of writing

We often believe more of what we see than what we hear. The lady wrote down each of her moves on a piece of paper, each time crossing out her previous move and writing her next move under it.

I expect she did this because it: a) showed me the number of her moves and the size of each move – important elements in negotiations; b) ensured there was no miscommunication in what she was offering; and c) made her moves appear more consequential.

These same advantages of writing down offers apply in other negotiation contexts.

3. Anchoring and the psychology of the dance

I felt like I got a pretty good deal at the end of the day. Why? Because the vendor moved numerous times to go from 285 to 60 and I only moved once, from 50 to 60. The number and amount of moves by each side – the “dance” in many negotiations – contributes to each side’s psychological satisfaction with the result.

I also felt good because my guide – who had been there hundreds of times – told me on the chairlift 50 or 60 RMB would be a good price.

Contrast this with a story told to me in Hong Kong by a successful mergers and acquisition lawyer. Years before he had been in Tiananmen Square looking for a gift for his daughter. He saw something he wanted in an open marketplace there and the vendor told him it cost 265 RMB.

He then offered 50 RMB. “Sold” the vendor responded. How did he feel? That he overpaid. And it was solely because there was no “dance.”

The “dance” – where it is expected – has a substantial psychological value to both sides.

Keep in mind also that in both instances the vendors set the initial price and anchored our psychological expectations of value by making that first move.

Anchoring is a powerful move in many negotiations.

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Marty Latz is the founder of Latz Negotiation Institute, a national negotiation training and consulting company, and ExpertNegotiator, a Web-based software company that helps managers and negotiators more effectively negotiate and implement best practices based on the experts’ proven research.  He is also the author of Gain the Edge! Negotiating to Get What You Want (St. Martin’s Press 2004). He can be reached at 480-951-3222 or Latz@ExpertNegotiator.com

ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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